XPO's 9.07% Plunge and 90.55% Volume Surge Expose Top 500 Trading Strategy's Volatility

On July 31, 2025, XPO (XPO) closed with a 9.07% decline, its largest single-day drop in recent months, as trading volume surged 90.55% to $0.46 billion. The selloff followed the logistics company’s second-quarter earnings report, which revealed a sharp contraction in profitability despite flat revenue of $2.08 billion. Net income fell to $106 million from $150 million a year earlier, while earnings per share dropped to $0.89. The North American Less-Than-Truckload (LTL) division, XPO’s core segment, saw a 2.5% revenue decline, with daily shipments and tonnage plummeting 5.1% and 6.7%, respectively. The weakness in freight demand, described by the CEO as a “soft freight environment,” raised concerns about the division’s long-term growth potential.

The market’s reaction appears to reflect a mix of short-term disappointment and broader sector trends. XPO’s stock has been volatile, with 17 moves exceeding 5% over the past year. The recent drop, while significant, does not signal a fundamental shift in investor sentiment. This is evident from the stock’s 4.3% rebound six days prior, triggered by an analyst at Stifel raising its price target to $145 from $135. The analyst cited stable market trends and robust pricing power in the LTL sector, which had also been bolstered by Saia’s better-than-expected Q2 results. However, XPO’s underperformance highlights ongoing challenges in balancing pricing resilience with volume declines in a competitive logistics landscape.

The strategy of purchasing the top 500 stocks by daily trading volume and holding them for one day generated a 166.71% return from 2022 to July 30, 2025. This outperformed the benchmark return of 29.18%, achieving an excess return of 137.53%. The approach capitalized on high-liquidity stocks, including those with strong volume surges like VICI Properties and Verisign. The success underscores the role of liquidity and momentum in capturing market shifts, with XPO’s recent volatility serving as a case study in how sector-specific dynamics can influence trading outcomes.